Bitcoin price surge may be driving up interest in China’s digital yuan, central bank says

A person counts 100 renminbi notes with the Chinese flag in the background.

Sheldon Cooper | SOPA Images | LightRocket | Getty Images

GUANGZHOU, China — Interest in China’s digital yuan mission might in half be pushed by the surging price of bitcoin, China’s central bank mentioned Thursday, even because the cryptocurrency is successfully banned in the world’s second-largest financial system.

China’s digital yuan is an instance of a central bank digital forex (CBDC) which goals to switch among the money in circulation.

The the People’s Bank of China (PBOC) sees it as a technique to advance cashless funds. It is successfully a digital model of fiat forex. The central bank has been engaged on a digital forex since 2014.

Speaking to reporters, Wang Xin, PBOC analysis bureau director, mentioned market interest in the digital yuan is “very strong and everyone is paying close attention.”

“On one hand, this is related to more and more central banks in the world participating in the development of domestic digital currencies,” Wang mentioned, based on a CNBC translation of his Mandarin feedback.

Quite a lot of central banks world wide — together with Japan, the U.Ok., Sweden and Switzerland — are exploring issuing their own digital currencies. China is arguably the furthest forward.

“On the other hand, this (interest) may also be related to the large increase in the price of bitcoin,” Wang mentioned.

The price of bitcoin has repeatedly hit file highs in the previous few months. This 12 months alone, it has greater than doubled.

But China’s digital yuan will not be like bitcoin.

The latter is a so-called decentralized cryptocurrency, which implies it has no central authority — equivalent to a central bank — to manage it. Bitcoin additionally works on a technology called blockchain and it is unclear at this level what the digital yuan will be based mostly on.

We will push forward with digital RMB pilots, and accumulate extra expertise.

Wang Xin

analysis bureau director, People’s Bank of China

More digital yuan pilots forward

So far, the PBOC has not given a timeline for the nationwide rollout of the digital yuan. But it has carried out a variety of real-world pilot tasks in cities round China.

These usually take the type of lotteries the place folks in these cities can apply to get a slice of a pool of digital yuan after which spend it at taking part retailers.

Over the Chinese Lunar New Year in February, authorities handed out about $1.5 million in Beijing. Other main cities including Shenzhen and Chengdu have had their very own trials.

Wang mentioned the pilots and are “increasing, and also expanding in scope.” He hinted at extra trials to return.

“Next, we will push ahead with digital RMB pilots, and accumulate more experience,” he mentioned.

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